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ISS, Glass Lewis on opposite sides of Toyota dual-class vote

Proxy-voting advisory firms Institutional Shareholder Services and Glass Lewis & Co. have come out on different sides of a Toyota Motor Corp. proposal to create a dual-class share structure.

ISS recommends clients vote against the proposal.

Based on its analysis, “it is difficult to escape the impression that Toyota Motor intends to change its shareholder composition by replacing part of its common shareholder base, which may include vocal shareholders, with Class AA shareholders, who are likely to be Japanese pensioners, who tend to be silent and passive shareholders,” ISS said in its Toyota proxy-vote recommendation report. “Or worse, if the company believes that Class AA shareholders are stable shareholders who tend to side with management, that perception could reduce the company's incentive to reach out to common shareholders and seek their input, which is not in the interests of common shareholders.”

Glass Lewis recommends its clients vote in favor of the proposal, stating “the authority to issue preferred shares may benefit shareholders by providing the company with the flexibility to finance operations and future business opportunities as well as to strengthen the company's capital base.”

In its recommendation report, Glass Lewis said: “In our opinion, management should be afforded reasonable discretion to obtain financing in the most cost-effective manner.”

In addition, ISS recommends clients vote in favor of all 12 nominees for director of the company and for all four statutory auditors and the one alternate statutory auditor.

Glass Lewis recommends clients votes against the re-election as directors of Takeshi Uchiyamada, Toyota chairman; Ikuo Uno and Mark T. Hogan as well as opposing the election of three statutory auditors. In calling for a vote against Mr. Uchiyamada, Glass Lewis seeks to hold him accountable for oversight that contributed to the loss of shareholder value from automobile recalls and his responsibility for insufficient independence of the board of directors, the Glass Lewis report said.

The Toyota Motor's annual meeting is Tuesday in Toyota City, Japan